Altice, the European telecoms group, has agreed to buy the US firm Cablevision in a cash-and-shares deal worth $17.7bn.
The move is the latest coup from Altice’s founder, Patrick Drahi, who built a telecoms and cable TV empire in recent years through debt-fuelled acquisitions in France, Portugal, and Israel.
Drahi entered the US market in May by buying the regional cable TV group Suddenlink for $9.1bn (£5.9bn).
The French-Israeli billionaire persuaded Cablevision’s owners, the Dolan family, who had long said they would not sell, to part with the operator for $34.90 in cash per share, a 22% premium on Wednesday’s closing price of $28.54.
“The acquisition of Cablevision represents Altice’s next step in the US market following the announced acquisition of Suddenlink earlier this year,” Altice said. “Together both operators represent the fourth-largest cable operation in the US.”
Altice, which has been expanding in television and radio in Europe in recent months, will also become the owner of Newsday newspaper and News 12 Networks, a regional news channel.
Cablevision has 3.1 million customers in the New York, Connecticut and New Jersey area.
The transaction, expected to close in the first half of next year, is to be financed with $14.5bn of new and existing debt at Cablevision, cash on hand at Cablevision and $3.3bn of cash from Altice.
Altice said as part of the financing it would issue class A shares, which have fewer voting rights than the B shares held largely by Drahi.
Gary Paulin, from Aviate Global brokerage, said Altice could benefit from applying its cost-cutting strategies at Cablevision. Altice estimated annual synergies at $900m.
“Cablevision is ripe for picking as it has the lowest margins of the four major US players … so efficiencies could be had if Altice execute in their normal manner,” he said, adding that Cablevision margins were 28% compared with the US cable average of 35%.
Two investment funds, BC Partners and CPP Investment Board, have also agreed to buy up to a third of Cablevision to help pay for the deal. JP Morgan, BNP Paribas and Barclays have committed to financing the deal and also advised Altice on it. Cablevision was advised by Bank of America Merrill Lynch, Guggenheim Securities and PJT Partners.
Source: https://www.theguardian.com
